Wednesday, 18 March 2015 17:23
JAKARTA/KUALA LUMPUR: Indonesian palm oil exports dropped to a five-month low in February, data from an industry body showed, but shipments are expected to pick up soon as key buyer China replenishes its depleting stockpiles of the tropical oil.
Higher imports by China, the world’s No.2 edible oil buyer after India, will support benchmark palm prices that have shed more than 3 percent this year on weak demand and are now near a seven-week low of 2,128 ringgit ($ 574) a tonne.
Palm and palm kernel oils exports from top producer Indonesia eased 1 percent from a month ago to 1.79 million tonnes in February – the lowest since September – the Indonesian Palm Oil Association (GAPKI) said.
Exports have continuously weakened since November.
Shipment to China halved to 98,980 tonnes in the month from 196,840 tonnes in January, according to GAPKI.
“China is experiencing a slowdown in economic growth,” Fadhil Hasan, executive director at GAPKI, said in the statement. He added that lower prices of rival soybean oil could have also prompted buyers to buy less palm oil.
But Chinese buyers may book more palm between April to June as they restock to meet domestic needs, traders said.
“Prices have come off quite sharply. That should help stimulate some kind of demand,” said a Malaysia-based analyst.
“And Chinese stocks are low compared to historical standards … they will have to buy.”
Last week, China bought about 300,000-400,000 tonnes of refined, bleached and deodorized palm olein, mostly from Malaysia, a Singapore-based trader told Reuters
Whether China’s palm needs will be fulfilled by Indonesia or No.2 producer Malaysia will hinge on export duties on the crude grade. Malaysia said it will end its duty-free policy for crude palm oil from April.
Malaysian palm oil exports in February were at their weakest in nearly eight years, with shipments to China plunging 70 percent to 64,765 tonnes from 216,253 tonnes a month ago, data from the Malaysian Palm Oil Board showed.
Copyright Reuters, 2015
